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BANKING
As
a newcomer to the United States you will need to
choose a bank. Your first reaction might be to
choose a bank with international prominence. This
may not be your best choice because you may merely
become an account number with little chance of establishing
a relationship with the bank management. A wiser
choice would be to select a lesser- known
bank or a suburban branch of a well-known bank.
This will enable you to establish a relationship
with your banker, and develop a credit rating (credit
in the USA is based on a rating from independent
companies who keep track of your debts). It is
not merely your reputation with your bank. See
section on Credit.
HOW
TO CHOOSE A BANK
Is your money safe?
 It is essential that the bank you choose
be insured by the Federal Deposit Insurance Corporation
(FDIC). Not all financial institutions are insured
by the FDIC. The FDIC is an independent agency
of the United States government, which insures bank
deposits in case of bank failure. You do not pay
the insurance, your bank does. The FDIC insures
deposits in national and most state banks. Most
Savings and Loan Associations are insured by the
Federal Savings and Loan Insurance Corporation (FSLIC).
If a bank gets into trouble and has to be closed,
the FDIC is on hand promptly with cash to protect
insured depositors. Bank failures are very rare,
but they do occur. The basic insured amount for
a depositor is $100,000.00. Deposits maintained
in different rights or capacities are each separately
insured for $100,000.00. Some accounts will not
be insured (e.g., Money Market Accounts).
Types of Accounts
Checking:
A
checking account, or time deposit account, typically
pays no interest unless you maintain a minimum
balance. This minimum balance is determined by
the bank.
Depending
on the account you choose, you may write unlimited
checks in a month for a fee, or, a maximum number
of checks a month, agreeing to pay a fee if you
exceed this number. In addition most banks do
charge fees for certain transactions, such as
using an ATM machine that does not belong to your
bank.
Savings:
A
savings account pays a low interest rate while
the money is left in the account. Some banks
allow for automatic transfer of funds from savings
to checking to prevent overdrafts.
Money
Market Accounts:
These
pay more interest than savings or checking accounts,
and were popular when interest rates were high.
They are not insured, and the interest rate fluctuates.
Often these accounts can be operated in conjunction
with a checkbook.
Certificates
of Deposit (CD):
These
are savings accounts with a particular
mandatory time period of investment. If you withdraw
the money before the time is up, you pay a penalty. CDs can
be obtained for any period of time, usually with
a one-month minimum. Check out the maturity dates
of all CDs whether they are issued by a bank or
a savings and loan.
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There
are two types of CDs:
- Fixed-Maturity
Certificates. When
these CD's mature, they either stop
earning interest or the interest rate
drops to the usual passbook savings
account rate.
- Multiple-Maturity
Certificates. These
are automatically renewed for another
term if you do not make other arrangements
within a certain period of time past
the original maturity date.
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Bank
Services: Mortgages and Loans
Home
Loans:
When
buying a home, you have the choice of going through
a bank, savings and loan association, credit union,
or loan broker, who will find the loan for you.
All banks and Savings and Loan Associations offer
fixed or fluctuating-rate mortgages and loans
to their customers. See section on Housing.
Personal
Loans:
Your
bank also offers personal loans for vacations,
automobiles, boats, and home remodeling. The
bank will want to know about your income and your
assets, as well as other loans. See section on
Credit.
Home
Equity Loans:
Home
Equity Loans are loans based on the equity you
already possess on your home. This is often a
second mortgage and will operate on a revolving
credit basis (like your credit card).
Credit
Cards:
See
section on Credit
Credit Unions:
These
are like banks, but you are required to be a member.
Membership is often limited to your type of occupation
or your membership in some other association.
Their interest rates are competitive and often
better than what banks will offer.
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